NEW YORK - The sexual assault case against Dominique Strauss-Kahn, the former International Monetary Fund chief and French politician accused of attacking a housekeeper in his Manhattan hotel suite in May, could be about to collapse, The New York Times reported Friday. citing two unnamed law enforcement officials close to the case, the newspaper said prosecutors did not believe much of the story told by the French politician's Guinea-born accuser, and that she had repeatedly lied to them since the May 14 alleged attack. Prosecutors will likely tell the court later on Friday, when Strauss-Kahn is set to make an unexpected reappearance ahead of the next scheduled hearing on July 18, that they "have problems with the case,'' in contrast to their once steel confidence in the evidence against him, according to The Times. At the hearing, Justice Michael Obus was expected to consider a change in the bail conditions under which Strauss-Kahn was released to house arrest - including 24-hour security monitoring and an ankle bracelet. "It is a mess, a mess on both sides,'' one official told The Times. The revelations could prove an extraordinary turn-around for former IMF director, as the newspaper said he could be released from house arrest due to questions surrounding his accuser. The newspaper said law enforcement officials had uncovered questions related to the 32-year-old hotel maid's asylum application, and unconfirmed links to criminal activity, such as involvement with money laundering and drug dealing. There was a recorded phone conversation between the maid and a man in prison on marijuana possession charges about the "possible benefits" of pursuing charges against Strauss-Kahn, the officials said. The man was one of a number of people who had deposited a total sum of $US100,000, into the accuser's bank account over the last two years. And despite telling investigators her asylum seeker application contained details of a previous rape, they could not find any such account. Strauss-Kahn has denied all seven charges including trying to rape the woman and sexually assaulting her when she came to clean his hotel suite in a luxury Manhattan hotel. Although forensic tests showed evidence of a sexual encounter between the two, the woman has repeatedly lied since making her initial allegations May 14, the Times reports it was told by one of the officials. Senior prosecutors met Thursday with lawyers for Strauss-Kahn, once a leading candidate for the French presidency, to discuss the possibility of dismissing the felony charges against him. The two sides also discussed new discoveries about the 32-year-old accuser, including the possibility that she is linked to drug dealing and money laundering, the Times reports. Strauss-Kahn resigned from his IMF post after the allegations and was required to post $1 million bail and $5 million bond. He has agreed to remain under 24-hour home confinement. Prosecutors and defence lawyers will return to the state Supreme Court in Manhattan Friday, and Strauss-Kahn could have his bail conditions eased and house arrest lifted, the Times reports.